tv Worldwide Exchange CNBC August 31, 2012 4:00am-6:00am EDT
hello, hello and welcome to today's edition of worldwide exchange." . i'm ross westgate. these are your headlines from around the world. >> ben bernanke gets ready to set speak at jackson hole. investors primed for any hints the central bank may take new acstha action to spur the company. >> mitt romney gives a rousing speech at the republican national convention. and another warning sign from japan's struggling factories. industrial output falls in july. india gdp growth rises from 3 1/2 year loss.
most analysts say don't expect from any near term help from the country's central bank. okay. very good welcome to you. if you just joined us today on cnbc this is "worldwide exchange". we have some data. the rate unchanged at 10.7%. this is the july rate for italy. the june rate revised slightly down. 10.7 to 10.1. not quite as high as we thought. fairly elevated. still loads to get through on today's program. we'll be over at jackson hole as investors wait to see what ben bernanke will say about any new rounds of bond purchases. we have second quarter gdp figures which suggests india is going all right. we'll be out in paris where the french finance minister has told
cnbc the government will stick to its deficit goals and pledges action on jobs. talking about jobs, we also have the latest from the republican national convention in tampa, romney formally accepted the nomination. he's talking about trying to create 12 million jobs. but first the anticipation has been growing all week. fed chairman ben bernanke will give the keynote speech at the fed's annual symposium in jackson hole at 10:00 eastern. we will preview what bernanke may or may not say. >> fed chairman will open the possibility to additional quantitative easing but not providing a definitive. bernanke has not front run the committee. there's a lot of data before the committee has to decide on september 13th. there's a payroll report and several reports on the services
sector and manufacturing. plus there will be a pretty long and drawn out debate on the cost and benefits of additional quantitative easing. one person who we spoke to last night about the benefits and the cost was philadelphia fed president charles plosser said it wasn't there. >> i don't think quantitative easing meets the cost benefit test. >> part of the problem is the data has been in the middle. growth is at 2%. just about to keep the unemployment rate stable maybe rising a little bit. doesn't create a definitive case. we talked to dennis lockhart and he said it was not an easy decision. >> it's a close call. if we were to see deterioration from this point and let's say a persistence of job growth numbers that were well below 100,000 a month, if we were to see that, or if we were to see
signs of disinflation that could signal the on set of deflation then there wouldn't be much of a question about policy. >> fed policy will be a huge subject of debate of equal importance is the discussions about european central bank and its policies as well. this ecb meets next week on september 6th and big question what kind of plans they have to buy the debt of troubled sovereign nations in the eurozone. the more the ecb does it may change hat the fed does which is another reason why bernanke will keep his options open. >> that was steve who will be in jackson hole again today. we've been waiting all week for ben bernanke to speak. have we been waiting all week for him to say nothing? >> i think keeping the option open can be a good choice.
i think not only because of the ecb and because of the amount of data, there is no indication of how to really steer quantitative easing three in order to have more satisfactory effect than the first two operations, nonstandard implementation. there's still no clear case from the data and i think that the data has been quite mixed, so there is no clear case, there's clearly no push, no hurry for the fed to embark on a new program especially if embarking now can take a political dimension especially just the day after or the same day of the end of the republican convention. probably the time will come for a qe3, but either later in the year or early neck year when the
political arena is less sensitive and you have more data to establish that the recovery in the u.s. is really still very slow. >> is part of the reason we've seen global stocks weakening towards the end of this week, last few sessions because they are having got excited about fed action post-minutes. they now started pricing the fact we may not get fed action? >> yeah. this, of course, and also coming to terms of the market through the idea that really we are in a synchronized slow down in the global economy, starting to see very worse data from asia. obviously european situation is in the doldrums and in the u.s. we're heading supply side recovery, having a recovery where industrial investment is important but obviously before having some significant effect on demand it's going to take a longer time.
so, i think the market is not very big enthusiasm, i would say in this few weeks reflect both lower expectation of a qe3 and slow down, general slow down of global demand. >> okay. good to have you on. we'll turn our attention to japan. the economy continues to str ss stumble. manufacturing hit a near 16 month low. last month's cpi showed pressures. household spending and jobs picked up. economists say don't expect the momentum to last. a big reason for the pessimism, the government plans to end a subsidy program that's helped japanese firms keep their workforce. this is expected to expire as soon as october and without those measures there's a risk japan's jobless rate may worsen. at the same time, tokyo is also
poised to hold back on state spending next month as it braces for cash problems. the finance minister says money is running out due to a block deficit financing bill. japan's opposition party is not willing to budge unless prime minister noda calls for an early election. good to see you, ed. surprisingly weak industrial output, how much is that darkening the economic outlook? >> the industrial production numbers were certainly disappointing. one data point that wasn't on there is that housing starts have risen and risen above expectations. i think that combined with the personal spending number increased indicates consumer spending is actually fairly healthy right now in japan. government action can be taken and probably will be taken to address the industrial
production. certainly going to affect europe but other stimulative actions japan can take and a new government may be coming in place in october. political pressure for new elections is undeniable and that can change the equation quite a bit. >> this impasse in government's laying out plans for state spending, they could run out of cash, the opposition saying we won't pass anything until we get elections. do you think that will play out? >> well, the opposition certainly wants to see an election and they want to see an election soon, so they are going to -- there's going to be a lot of brinksmanship involved in trying to starve the government into forcing an election. how successful that will be i don't know. i don't know, frankly, whether that will rebound against the opposition party in an actual election in november if that's when it comes. >> where does this leave the bank of -- >> refusing to give your government money to spend. >> it is because you can be
blamed for it. rather than the government. i wonder whether this leaves the bank of japan. with this output data today, i mean i presume they are going to have to downgrade their forecast and of course they promised the 1% inflation rate. >> completely agree with you. that's probably one of the most concerning aspects of today's numbers. the inflation target numbers become less and less realistic when you see a production number like that. so we'll see, again, a new government in november. and certainly a new governor for the bank of japan in march/april, we could see some significant policy changes, i believe. targeted inflation. >> exports here in these numbers in japan, sharpest drop in six months. this is in line in trends with other export driven asian
economies. how badly is the area being affected right now by the rest of the world? >> i think very badly. i think that what we're seeing now is a cyclical slow down in exports that's due very clearly to the fact that europe and the u.s. are slowing down or still being able to produce a very slow demand. the worries from a cyclical situation, a structural situation, if it's true that we'll have continuation of banks cutting assets worldwide because of new regulation and obviously cut straight finance, if it's true also the united states is on the verge of a major program so will need less, so more structural things is true,
concluded raising protection in the last six months then this slump in trade can be more structural and then it is more meaningful for the asian economy including japan, of course. >> ed, you sort of teased up the bank would have to come up with other measures. so what other things then might we expect in terms of policy? >> well, i think the big difference between let's say japan and europe when faced with this global slow down is there's actually still a significant amount of cash in the japanese system. corporate trend has been healthier than in decade. the banking system is healthier. banking system in europe is on its knees. households in europe is on its knees. japanese households are flush with cash. you have a lot of room before you get to america 8% or europe 10% to 20% unemployment. there's money to fight the problem here that does not exist
in europe and again personal consumption is one of the numbers we look to the see whether asia in general and that actually includes china is going to survive better than people think if there's a global slow down. internal consumption patterns and regional consumption patterns in asia will in my opinion hold up better than people expect. depends on the run rate for 1.7, 1.8% gdp growth. first or second best gdp growth of any developed country in the world. running neck and neck with the united states this year. europe will see negative gdp rates. will see disastrous numbers. japan actually becomes an investment destination and asia reminds an investment destination compared with the rest of the global stock markets that investors have to choose from. >> okay. we'll see what happens. ed, thanks for joining us.
go ahead and enjoy your weekend. we appreciate you joining us. ed rogers, ceo and chief investment officer of rogers investment advisors. >> we're weighted to the upside. the stoxx 600. we have losses yesterday between half and 1% for most of the major european bourses. session highs, ftse 100 up happen cac up. ibex up .8%. italian debt, helped yields a little bit and went higher. yields in italy pretty much where we closed yesterday, 5.79%. ten year spanish yields are up to 6.62%. we're about 1.35 in uk. not a lot of position taken ahead of bernanke speech.
we don't expect any big announcements. euro/dollar above 1.25. aussie/dollar 1.03 handle. sterling dollar below 1.58. not a lot of movement in the last 24 hours. pretty similar for commodities as well. brent bryce 123. all elevated. as heed by the japanese industrial outlook. gold firmer. 1658 as is platinum nymex, 1505. what about the asian session? only one person who can tell us what's going on. we go to singapore. asian markets continue to slip further in the red as hopes faded. the nikkei was actually the worst performer down 1.6%
heading a four week closing low on the back of the sluggish july factory data. shanghai composite lower by a quarter of percent to 3 1/2 year low. volumes very light ahead of the official august pmi numbers due tomorrow. commercial life insurers got a strong boost. hong kong loss from blue chip names outweighed a slight rebound. south korea's kospi ended a tad lower. australia, energy plays claude back from lost ground by still ended flat. lastly india's sensex lower .7%. back to you. >> now india's april to june
quarter gdp numbers have come in better than -- not much better than expected. plenty of room for improvement. we have the details live from mumbai. >> reporter: well, in just sheer numbers, 5% growth in gdp is slightly better than 5.3% we saw in the third quarter but more reasons to worry. what's surprising is growth in the construction sector which rose to a five year high of 5.9%. delayed monsoon facilitated construction. analysts think there could be a risk that this figure could be revised lower. agriculture grew at 2.9%. better than what the market expected.
wholesale and retail trading jumped to 4%. gross capital formation and consumption demand in india fell. these indicators showing the government's policy is indeed affecting india's climate. what do we expect? next quarter gdp could be better. clearly the inflation problem is much worse than the growth problem at this time. >> thanks so much. that's the latest from mumbai. let's get back out to lucas. luke, what's particularly concerning here is the weakness of the consumer, consumer spending at the moment in india as was pointed out.
what will turn that around? what will it mean for consumers in india because that's one of the main planks. >> it is. quite interestingly normally an economy that is led by the service sector is also led by consumption and in india it's also the case more or less consumption ratio, consumption gdp is more than half of gdp. but that consumption is slowing down. in the long term trend as far as i saw from the data, and service sector is improving, is increasing its grip on the economy. it's quite a strange development. i think the main failure for indian economy is the failure to have a competitive manufacturing sector. sorry, this might not be very regional but this is the flow of the indian sector and the fact that not with standing the fact that the service sector is growing in the economy,
consumption is not growing, consumption is slowing down. it really shows in some way the flow of the indian economy to develop a manufacturing sector on the side of the service sector where productivity can be higher, wages can be higher and demand can be stronger. >> stick around. more to come. also still to come an awkward moment for republicans in tampa as they select endorsement for the romney campaign falls somewhat flat. more details when we come back. a passionate belief, and the foundation on which merrill lynch has been built. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life.
now the republican national convention mitt romney made his case for american voters in a high stakes speech at the republican national convention accepting the gop presidential nomination. romney pledged building jobs and economy. romney said if he's elected he'll work to unify a divided country that once believed in president obama's campaign promise but since lost hope. >> wish president obama succeeded because i want america to succeed but his promises gave way to disappointments and division. this isn't something we have to
accept. now is the moment when we can do something and with your help we will do something. >> and mitt romney is currently running even in most national polls against president obama and the focus is on competitive races end key swing states like florida and virginia where both he and paul ryan will examine later today. back here in europe the commission plans to bring eurozone banks under the control of the ecb. the ecb will have oversight of all banks that have tapped the esm from january of next year and all remaining banks in 2014. this is the outgoing bank of england adam post who says the ecb would be right to cap bond yields. speaking on the sidelines of jackson hole promise it's well within the mandate of the
central bank during times of trouble. not comments are a reiteratation of what he told us early they are week. >> central bank's job in the eurozone just as every where is to provide monetary and financial stability. their mandate is to stop the panic, buy and selling sovereign banks is what they are supposed to do. this is their mandate. >> the ecb policymaker says central bank should only buy bonds ever distressed countries if the imf are involved. he said central bank president mario draghi would present the bond-buying plan at its press conference on september 6th. at the same time head of german bank is considering stepping down. weidmann mulled a resignation in recent weeks. he's one of the staunchest opponents of expansion of the ecb bond-buying program to
support struggling economies like spain and economy. in an interview weidmann did signal a reluctance to step down saying i can carry out my duties best if i remain in office. we saw a good auction support yesterday for new benchmark from italy. clearly, i mean belief in the market that at some point the ecb will be able to step in and support, you know, spanish and italian debt yields. it requires, of course, a lot of things to happen like spain asking for assistance. but are investors right to bet that these things are going to happen? >> you know, this is exactly the point you mentioned, it's exactly the point. why should the ecb intervene when a country asks for help and only if a country asks for help. if a country asks for help for
financial assistance, it means that it has solvency problems not liquidity problems. so, in this case i side with the germans and i say if a country has sovereigncy problem it's not the role of the ecb to help, it has to put order in their home before and then maybe we can speak of assistance of the ecb. on the other hand, countries such as italy which has a long way of reforming their country and there have been comments by merkel and other german officials, this country's heavily liquidity crisis, the yield probably does not reflect the nation's ability to repay their debt. so, in this case forcing italy to accept help by the imf or by the other european institution would be an exaggeration because
it's not a solvency crisis and if the ecb wants to help a liquidity crisis only if countries declare that it's a solvency crisis then there's something wrong with this whole program. think think is the most important aspect of this program and the most critical aspect it and the problem that they have to solve at the ecb. >> okay. good to see you today. have a good weekend. thanks so much for joining us. we'll take a short break. still to come rumors of jens considering resignation. for morehead to our website at cnbc.com. the french finance minister promises actions on jobs and reducing the deficit. more details after this. mom's smartphone...
these are the headlines. ben bernanke gets set to speak at the annual sim possible sim in jackson hole. investors are primed for any hints that the central bank may take new acsthon spur the economy. mitt romney gave a rousing speech at the republican national convention focused heavily on a pledge to create millions of new jobs.
another warning sign from japan struggling tack towers. industrial output surprisingly falls in july on weaker demand from both china and europe. india gdp growth rises from 3 1/2 year loss. most analysts say don't expect any near term help from the country's central bank. so we're getting towards the end of the month. last trading day of the month. let's look how the major indices have formed. ftse 100 this month up about a .3%. tale of two hearts because the middle of the month we had steady declines. in the last few weeks we've dropped down. what about the dax? any different? the dax this month up .4%. now of course we saw a big run in the ibex towards the end of june. there's the session. up 2.25%.
what about the ibex? this has been up 7.6% in the month. so not massive towards the end. big out performer for the spanish markets. u.s. of course as they wait for ben bernanke as the rest of the global markets will do this week, pretty flat now as far as the month is concerned. similar performances for the s&p as well now down 1.46%. of course we've seen the apple impact as well in the s&p and for tech stocks, the nasdaq this month up 3.71%. so, slim gains for some, slim losses for the rest but the ibex certainly being the stand out as you can see. a lot put in in terms of the hope of the ecb action. french government will stick to its 3% deficit as they matter national sovereignty that's according to finance minister pierre moscovici.
stephane joins us for more. >> reporter: all week we talked about the french government has been sending messages to the business community after a clash this summer between one of the ministers and some ceos. hose months, the finance minister explained yesterday that the government will not discourage job creations and he believes the socialist plan for creation of a new 75% tax, income tax rate is fully compatible with pro business approach. i caught up with him yesterday after his visit to the summer university. >> we are conscious that employment comes and goes. that firms create employment. this is why we need to create also a secure environment for them financially, fiscally in
order to help them to invest, to innovate, to produce in france and i want to give a reassuring message. we have our own agenda, program but i see no contradiction between our will to advance, to move towards social justice and pro business. >> did you get concerns about the 75% tax on high incomes that you want to implement? >> i hear that. this is a taxation that we will create. we'll try to establish it in an intelligent way meaning there are some behaviors that should be, well, forgiven for cutting. but also we must not discourage the creativity of france. we'll try to find the best solution. >> there are conflicting positions in europe on how to the end crisis.
do you think europe is becoming ungovernable because of these positions? >> we must fine in the next few months and few weeks to find a stable solution for the eurozone because i think today uncertainty is the main threat for growth. i'm persuaded that we have huge potential on this continent for growing, for creating, innovation, again. but we need a political stability, to have a strong framework. we started to do that in the last council on the 28th, 29th of june. we must end the working on the 18th or 19th. >> you're confident that you'll convince the germans to accept the euro bonds. >> not in the short term but i think that if we look at the future, at integration, well this could be at the end of the process and we still have this
idea in mind not as an immediate solution but maybe later on. >> one last question about spain do you think the country has to accept a bailout to get access to the ebc funding? >> our president was in madrid today. this is a choice that european government, spanish government has to make on its own. >> reporter: pierre moscovici wants to convince the germans to accept the euro bonds in the future. we'll see if he's successful but that seems to be a difficult task. okay. yes, thanks for that. it will be difficult. meanwhile tropical storm isaac is threatening the lower mississippi valley with flash floods and heavy rainfall. the u.s. national hurricane center forecast three to five inches rachb for the area. tornado and flash flood watches are in place for parts of the mississippi, arkansas and louisiana. the same time the insurance industry is starting to assess
potential damage from isaac. disaster model worldwide said the storm cost between $700 million and $2 billion onshore loss. how will the insurers be impacted. caroline is looking at that. are they coming out with any early comments? >> reporter: no. actually it's very early days. they have to look at the claims coming in and that usually takes a couple of weeks or even months. so it's very early days here. but, of course, we had a couple of risk modelling firms coming out with these estimates and they keep on rolling in. let me walk you through a couple of these. now risk modelling firm tigress eclaims at $1 to $2 billion. arr sees the cost around $700
million to $2 billion and most conservative forecast was for around $500 million to $1.5 billion. ross, i should say all in all it looks like a very benign hurricane for the insurance industry basically because analysts say that the brunt of the cost will actually be borne by the primary insurers, so the likes of all state and not be bassed on to re-insurance firms. it's limit when you think about the costs or losses relating to the hurricane. irene last year were double the size of this year's hurricane at $4.3 billion. back to you. >> a very special guest is coming up in a minute so i want to you think of some questions as well. stay tuned. watch the output. all centered around on what's going on at the national public conference. mitt romney made his case to american voters in a high stakes speech accepting the gop presidential nomination.
he's pledged to create millions of jobs and rebuild the economy although he didn't unveil any new proposals. romney said if he's elected he'll try network to unif i the country that once believed in president obama's campaign promise but since lost hope. >> wish president obama had succeed because i want america to succeed. but his promises gave way to disappointment and division. this isn't something we have to accept. now is the moment when we can do something. and with your help, we will do something. >> mitt romney is currently running even in most national polls with president obama and the to discuss on the competitive races in key swing states like florida and virginia where both he and running mate paul ryan will campaign later today. and in a move to possibly inject some hollywood glamour, clint eastwood spoke right before romney on thursday night. the actor made the case for
ousting president obama, firing up the crowd. although in a long and somewhat strange kind of way. >> how do you handle that? i mean what do you say to people? you know, i know people -- people are wondering you don't. okay. well i know southeast people in your own party were very disappointed we didn't close gitmo and i thought closing gitmo why close that, we spent so much money on it. i thought maybe as an excuse. >> okay. interesting so worth of idea there. so joining me now is our very own special guest here on "worldwide exchange". what did you think about clint eastwood's performance? yeah. kind of insightful. do you think the polls are right when you think mitt romney is in
a neck and neck race? okay. well that's what our guest thinks. i'm happy to say the special chair is with us for the remainder of the show. if you have any questions for our guest will be with us for the next hour and a half, please e-mail us at firstname.lastname@example.org. can be anybody sitting there. fantastic device. could be mario draghi. anybody you like. so there we go. great to have you on the show today empty chair. thank you so much for joining us. plenty more to come from empty chair. other stories we're following today, the apple ceo tim cook and google check larry page are in talks over several issues related to its property rights. the companies are having a dispute or patent.
page and cook spoke on the phone last week. lower officials in apple and google are in discussion as far as the stocks are concerned today in apple and google. we got the board? right. that's what the shares are doing. right. meanwhile samsung scored the latest win on it's on going patent battles. the court rejected the claims that samsung in fringd on its claims. ordered apple to pick up the legal proegds. samsung welcomed the decision. its shares were up in south korea. staying in the tech sector. he's the gadgets that could be hitting the shops this christmas.
>> reporter: i'm here at the show stopper's event where you get hands on experience and contact. with all those companies coming out with innovations. it's not just another press conference here but for three hours people can really go touch the new products, the new releases, speak to the people responsible and get a real feel for what is actually happening. have we ever experienced waking up in the morning, even after seven or eight hours sleep and still feeling really, really tired and not just waking up? have you ever asked yourself why that is? well the reason maybe that you're waking up in the wrong moment. here to explain is the representative of phone. >> this gadget is a renewed
sleep clock. what it does it is wakes you up at the proximate time when you should be awake. it knows when you're awake, when you're asleep and when you're in deep sleep. >> reporter: now nice to join you. another interesting company. stream tv network is in the field of tvs, 3-d technology which you can watch without glasses. i'm joined by the ceo. thanks for your time. tell us a little bit about the development in 3-d, 4 k technology as well. >> we've developed the world's best 3-d technology. it's a new television technology we've developed that's eliminated all the viewing angles, all the fuzziness and about to hit the consumer market. >> reporter: now there is another little gadget i found for you and if you are anything like me and love plants, but don't have the time to look
after your plants properly or not the knowledge then this wi-fi plant might be just your answer. what is it? it basically tells you the amount of moisture the earth has as well as whether the plant is fertilized or not and sends it via wi-fi to your ipad, for example. well i hope you enjoyed our little tour around show stopper showing the hottest in technology i picked out four. i'll sign off now on a boogie board and not the one on the water but this one. basically this is an lcd writer and it saves you about 50,000 pieces of paper over seven to ten years because you don't need any note pads any more. that was it from me from the show stoppers. cnbc. >> i wonder if that's actually going catch on.
what do you think, empty chair? pretty conclusive, i think. we've got some flashes coming out from knight. they will vote against the current merger. they will vote against that unless the merger terms improve. we'll talk about it some more. still to come the money keeps rolling in for england's top football stars. are they worth it? we'll discuss as we look at the transfer league deadline closing in on today.
. now the deadline for english football transfer closes this evening set up potential player moves. one of the biggest deals of the season has raised questions over the fees that clubs are willing to pay. manchester united taking a dutch player for around 24 million pounds. the director is talk about it. a report released on the eve of the transfer deadline suggests many premier board members are calling for changes to salary rules including the kick-off rule. more than 50% of clubs think
fairplay rules to curb excessive spending won't do that. joining for more is partner at mitch com. good morning to you. financial fairplay was brought in to make the business, the so-called business of football slightly more sustainable. your survey suggests that isn't going to happen. >> people are realizing people will pay advice jurors lot of money to get around the rules. >> advisors like you. >> possibly accountants as well to actually understand -- financial fairplay talks about balancing the books. you can only spend as much as you bring in. there are certain things that won't be count as part of the transfer expenditure. what people are doing are inflating their income at the other end so they can spend more. >> what do they want to see happen in? your sue va when you
a36% of clubs believe there will be fewer football clubs by 2020 they are worried about the business model if there is a business model for football. >> i think any business that spend more than 100% of its turn over on wage sass business that any sane businessman looks at is in trouble. a lot of top clubs spend more than 100% of their turnover in wages which is pretty crazy. >> can you change the model? because, you know, in a sense football has always been about, you know, passionate supporters becoming chairman and plowing more money. premier league we have international investors plowing money in. take a look at chelsea and man city. there's nobody hoping to make a return. >> supporters enjoy it when their clubs spend lots of money and bring in fantastic players. they enjoy it more than a club
that's financially well managed but not delivering results. but maybe one of the investors lose money, pulls out and the club may go into liquidation. you saw what happened in scotland. >> with rangers, of course. how big is the difference of opinion between those clubs at the bottom and those ones at the top? >> i think the clubs -- i think the football league has brought in some rules which effectively mirror financial fairplay, which pin the amount that can be spent on wages to 60% of the overall budget. those clubs are trying to come in to line and realize they need a stable future. they want more tv money the 3 billion going into the premier league. >> where are they going get some as well. we also of course got new fair play rules. do they need to be synced up
with what's happening? >> you wait for rules. they only apply to european competition. ultimate sang honor is removal from champion's league. there's a fair amount of apprenticeship clubs that don't play in the premier or championship leagues. >> finally, i don't know who you support -- >> i support. >> aside from liverpool who else will win do you think? >> chelsea might. >> i didn't prep you for that answer either. i didn't. adam thanks for that. let's ask our empty chair guest who will win the premier league. who do you think will win the cup? another chelsea tip. amazing. adam thank you for joining us. empty chair stays with us for the rest of the show. if you got any questions for our special empty chair guest.
e-mail us at email@example.com. michael brown written in and said empty chair is a she. somebody wrote in to ask whether indeed our special guest was the empty chair at the olympics. well we might reveal whether that is indeed the case later in the show. more exclusives coming out from empty chair later. lufthansa says strikes are affecting long haul flights after cancelling it's short to medium flights after union representing cabin crews said they were ready to start a series of strikes in a dispute over pay. despite the expected disruption the union which represents around two-thirds of lufthansa 19,000 cabin crusade it would not disclose the locations or timing of the action. lufthansa says it wants the ufo to return to negotiations. barclays newly appointed ceo is making headlines by revising
down his predecessors profitability targets to around 11%. he told "financial times" he'll unveil a full transformational plan for the bank in the first quarter of next year. elsewhere the italian fashion designer has delivered a bullish outlook for remainder of 2012 after reporting a 23% rise in profit. the company's ceo said china continues to offer solid growth despite some signs of a slow down. >> i still see strong consumption move around the world. of course there might be asian consumers spending in europe or the united states, but still a positive move. if you look also into the numbers of chinese stores, for example, for the last six months, our chinese stores had close to 38%. we see strong growth in china. >> so let's remind you what's on the agenda.
china will release official august pmi data. on monday hsbc will release its private survey ever china's manufacturing activity in august. and pmi releases out of taiwan and india. still to come on the show fed watchers are counting down to ben bernanke's speech in jackson hole later today. will he or won't he answer calls to qe3. we'll discuss all of that coming up and who knows mario draghi may join us on set, #emptychair. ddd#1
this is cnbc's "worldwide exchange". i'm ross westgate. these are your headlines from around the world. ben bernanke speaks at jackson hole where investors are primed for any hint the central bank they take action to spur the economy. mitt romney launched his full campaign important the white house at the national republican convention. he focused heavily on a pledge to create millions of new jobs. another warning sign for japan's struggling factories. output falls in july weaker demand from china and europe. over anyone da gdp growth rises from 3 1/2 year loss but only slightly. most analysts say don't expect near term help from the country's central bank.
okay. just tuned in the united states a very good morning to you right now. indications are for an upward start for u.s. equities. the dow is up 34 points above fair value. nasdaq about 11 points above fair value. and we're about six points on fair value on s&p 500. european stocks are firmer after closing down in the red yesterday. up between a quarter and a percent lower across the board for european stocks. ftse 100 up a quarter. xetra dax two-thirds. ibex .8%. ibex as we've gone through the course of august is one of the best performing indices, up over 7% for the month. benefits from ecb action.
italian debt auction yesterday. today yields in italy contained 5.74%. treasury at 1.64%. spanish yields, this is of concern, firmly above 6.5% at 6.68%. but there's not much position taken going on ahead of ben bernanke's speech in jackson hole, wyoming and that's replicated on the currency markets. euro/dollar stead i, 1.2551. it did decline as we went to the afternoon. aussie/dollar where it was yesterday. sterling dollar below. we're seeing a little bit of dollar weakening in the last half hour or so on the session. not much but turned down slightly. therefore we've seen commodities turning up slightly. brent this morning, firms over 113. that's where we stand right now
here in european trade. let's remind you what's happed to you in the asian trading session. we go singapore. >> thanks, ross. asian markets extended losses ahead of the jackson hole summit. the nikkei was the worst performer down 1.6% to a four week closing of this after japan's industrial output unexpectedly dropped 1.2% in july. sharp shares tumbled nearly 13% on disappointment that there's still no tie up deal with a firm out of taiwan. the kospi finned lower by a quarter of a percent. volumes were very light ahead of the official august pmi numbers. hong kong, losses from blew chip names like city pacific, china
unicom. australia energy place claude back from lost ground by the afx ended flat. sensex lower by 1%. india's second quarter gdp declined to 5.5% near a three year low but slightly expected than the poll. back to you. >> thanks for that. wow, we may have euro/dollar and european stocks up. i thought european jobless rate is now at 18 million, the highest on record. the unemployment rate is 18, the rate is 7.3%. total 18 million, jobless rate was 7.3. we were as expected. june jobless rate was up from 11.2%. so the july jobless rate 11.3, the june rate was upgrade slightly. meanwhile the anticipation has been growing, fed chairman ben
bernanke will give a speech at jackson hole today at 10:00 eastern. they are considering another round of quantitative easing but will short of saying anything. investors are dialing back their expectations. only 44% of fund managers think the fund will announce qe3 in september. joining us is andrew wilkinson. good morning to you. i wonder if we spent all week waiting for bernanke only for him to say very little. >> well, yes. i think that's the general tone of the speculation that people are not expecting him to say too much. i think recently the last couple of occasions bernanke has spoken, he's kind of failed to endorse there's further stimulus. we need to look back at the recent minutes from the august 1st conclusion of the fmoc to realize a lot of investors were
caught offguard somewhat by the tone of the minutes. many more members of the fmoc's decision-making council were in favor of further stimulus at some point and they actually mentioned the phrase qe3. which hasn't been brought to the fore before. what's going on is the u.s. economy has slowed sharply on account of events in the eurozone. as you just mentioned that's still washing up in the eurozone data. u.s. economy is less, you know, is not in such good condition to weather the storm should there be another shot to the system. what bernanke will do, ultimately, is basically provide more support and what's really important here is the size of the fed's balance sheet. >> yeah. just explain that. >> well, we've been very used to conventional monetary policy forever, the use of interest rates. interest rates have run their
course. you know while we have bond yields and that's something that the fed is trying to massage lower every time there's quantitative easing, it's really what's come to the fore over the last several years is the composition and size of the fed's balance sheet. it's printed its own money not districted from a helicopter but printed money in exchange for bonds taken from the markets, reducing the supply of available treasure injuries hoarding them and asking banks to actively lend in the open market. some of that money doesn't get put in the market, it's down consumer and business demand for loans. so, every time that the fed ratchets up its balance sheet we expect the economy to respond but it doesn't necessarily. >> so, look. we heard steve liesman, had two great interviews. he said the cost benefit analysis for the moment more qe
doesn't add up. mr. lockhart said to him ate close call. so here we go. in the next meeting andrew when push comes to shove because of the things you talked about do we get more qe or not? >> absolutely. i think bernanke is the guy who puts the motion on the table and other people come around. don't forget the process is. nonvoting member. the minutes made it clear. more people see on the committee the need for further support for the u.s. economy. the real bottom line here is the level of unemployment. rate of unemployment is not coming down fast enough. the u.s. economy is not growing quickly enough on account of the legacy of the financial crisis to create sufficient employment gains going forward on a two year horizon unemployment will still be way too high. >> okay. we'll come back to that. andrew good to have you on. also still to come an awkward moment for republicans in tampa
as a selected endorsement for the romney campaign falls somewhat flat. all the details and our special guest as well when we come back. [ male announcer ] while many automakers are just beginning to dabble with the idea of hybrid technology, it's already engrained in our dna. during the golden opportunity sales event, get great values on some of our newest models. this is the pursuit perfection. in communities across the country. whether it's supporting a delaware nonprofit that's providing training and employment opportunities, investing in the revitalization of a neighborhood in the bronx, or providing the financing to help a beloved san diego bakery expand, what's important to communities across the country
action. mitt romney launchings his full campaign for the white house at the republican national convention. and unemployment in the eurozone stays at a record high in july as the crisis weighs on the labor market. so mitt romney has been making his case to american voters in a high stakes speech at the republican national convention accepting the gop presidential nomination. he pledged to create millions of jobs and rebuild the economy although he didn't unveil any new proposals. romney sfaid if he's elected he'll unif i the country. >> i wish president obama succeeded because i want america to succeed. but his promises gave way to disappointment and division. this isn't something we have to accept. now is the moment when we can do something. and with your help we will do something.
mitt romney is running even in most national polls with president obama and the to discuss on the competitive races in key swing states like florida and virginia where bolt he and running mate paul ryan will campaign later today. andrew, you were just talking about how the fed needs to take action because unemployment rates are low. romney is talking about trying to create 12 million jobs. who has got the better chance of creating jobs, the fed or u.s. government? >> very good question. i think at this point the fed has the best chance. you know we're going to get hit by fiscal headwinds starting in 2013. i'm not all together convinced that the american people are quite ready to buy into a leadership under romney. there's a lot of suspicion about, you know, of what's going
on in washington and i'm not really sure that he's laid down along with paul ryan the best plans for the economy going forward. i'm not sure it will create the most fertile environment for employment. he's a big proponent of smaller government. i think the american people have to be convinced to a great deal about that. >> i would have thought at the moment surely we've exhausted -- surely we can only get jobs created by the government. i mean, whoever is running the government, i'm not talking about who might have the best ideas for creating jobs, the government having a congress that might be united. i know that's unlikely to happen. i would have thought its fiscal plans here are going to have the best chance to turn around the economy and inject the confidence that's going to lead to job creation rather than the central bank? >> i would tend to agree.
government spending ought to do the trick. the reality is many americans don't see it that way. they believe that the spirit of america is based upon the foundation of a set of conditions that create entrepreneurialism and allows people to go out and hire other workers and -- >> i'm just saying, isn't it the government has got a bigger role to play in that now to create those conditions as the central bank? i just think we maybe exhausted that. >> tend to agree with you, but much of america doesn't feel that way. it's quite a conundrum. there's a debate whether targeting gdp is something that bernanke will discuss or whether the fed will come around to using that in conjunction with its mandate. i feel that what we need to hear from bernanke is perhaps balance
sheet targeting so that it can clearly and explicitly express how large its balance sheet needs, bigger or smaller over the forthcoming period so people understand what it's intentions are, whether it's got a bias towards purchasing more treasuries in the open market or fewer or step up its pace of purchase. >> all right. also just in case you missed it. a move to inject hollywood glamour, clint eastwood spoke before romney. he made the case for ousting president obama and firing up the crowd but in a long and kind of strange kind of way. >> how do you handle -- how do you handle it. what do you say to people -- do you just -- i know people -- people are wondering -- you don't. okay. well i know even some people in
your own party were very disappoint when you didn't close gitmo. i think closing get month, why close that we spent so much money on it, but i thought maybe as an excuse. >> so the spirit of mr. eastwood, we have a special guest with us today as well. so who do you think will win the presidential election? kind of insightful. and if you want to send questions into our special guest today like michael brown can we ask the empty chair if she thinks there's a resolution to the spanish debt cry signatures in september and were you also the olympic chair at the olympics, was at it total financial disaster for retailers. send your questions in for our special guest. plenty to come in later. ben bernanke, more qe? pretty decisive i think. we'll keep going here on "worldwide exchange". tropical storm isaac is
threatening the lower mississippi valley with flash floods and heavy rainfall. the u.s. national hurricane center forecast three to five inches of rain for the area, tornado and flash flood watches are in place for parts of the mississippi, arkansas and louisiana. the insurance industry is starting to assess the potential damage from isaac, disaster modeler air worldwide said the storm caused 700 million and dollars 2 billion in insured onshore losses. so how long, those before the reinsurers start to add up the cost? caroline is with us in zurich. how long does you want normally take before they get the initial estimates? >> reporter: well, ross, it takes at least a couple of weeks if not even months because here's the process. first of all the primary insurers on the ground have to assess the damage and then the reinsurance companies themselves. they have to work out the claims coming from the primary insurers and that will take weeks and weeks. we did get some estimates
overnight from a couple of risk modelling firms. you mentioned one of them, air worldwide says it sees cost insurance loss between 700 million and dollars 2 billion. tigeress says losses could be $1 billion to $2 billion. another says 500 million to $1.5 billion. the range is pretty you big. having said that the impact on the reinsurance industry is fairly limited specifically when you compare that to the losses resulting from last year's hurricane irene which were more than double the size of the amount of $4.3 billion. impact like try to be limited. ross. >> we'll take a short break. still to come reports that the ecb may have oversight over banks that received aid from the ecb bail out fund. we'll have details when we come back.
u.s. futures are indicating a slightly upstart for the open today. s&p called up around three points start the dow at 28, nasdaq up ten, european stocks are up between a third and three quarters of a percent right now. here in europe the european commission is planning to bring all eurozone banks under the
control of the ecb. this is according to the newspaper in germany. cited the commission of michelle barnay. said the ebc would have oversight of all banks that tapped from january of next year and all remaining banks from 2014. at the same time the outgoing bank said the ecb will be absolutely right to cap bond yields. speaking on the sidelines of jackson hole, plosser reiterated comments he made on this show that ecb would be well within its mandate to act during times of trouble. here's a reminder of what he said this week. >> central bank's job in the ju eurozone just as every where is to stop the panic. buying and selling sovereign bonds is what they are supposed to do. >> ecb policymaker said central bank should only buy bonds of distressed countries if the imf
is involved in setting the terms for economic reforms. speaking in germany, he said central bank president mario draghi would present the bond-buying plan at its press conference on september 6th, next thursday. at the same time head of the german central bank has considered stepping down over the ecb's handling. weidmann modeled resign education. he's been staunchest opponent of the expansion of the ecb bond-buying program. the bundesbank declined to comment the report in an interview earlier this weidmann signaled a reluctance to step down. andrew is still with us. you heard that the ecb will lay out the plan on september the 6th. what will that do for us?
>> well, i think you've seen a risk appetite come back on board after markets took on board draghi's comments at the last ecb meeting. you know, a lot of people are talking about september being a dreadful month for equities and i'm not so sure. i think we're coming somewhat closer, not necessarily, you know, to a terminal point here but definitely getting closer to the end of this eurozone crisis. draghi is extremely astute politician and central banker and he's managed, in my opinion, to somewhat build a bridge here between politics and the regional central banks. everybody has recognized and i think look at spain and italy as a clear case that they cannot continue to go on the way that they have in the past, and that they have to, there has to be some restitution here. so, you know, the bundesbank's
concern is if the central bank steps in to purchase bonds, then the political will can fall to one side going forward. i think we're well beyond that point right now which is why draghi is building this bridge, we have to do this and in the german interest to do that. appetite into the last quarter the year could step up a notch. >> andrew thanks for that. good to see you. empty chair, i wonder whether you think the ecb will start the bond-buying program? i think that's pretty 50-50. the rumor was departure by president weidmann are emblematic. for more they'd our website, cnbc.com. let's remind you what's on the agenda today. august chicago pmi out at 9:45 eastern. then august report on consumer
sentiment, july factory orders. fed chairman ben bernanke will be giving a keynote speech and that's at 10:00 a.m. eastern time. so still to come, much more on that speech. and hawks and doves aren't the only animals roaming the grounds. this four legged creature seems to be interested in monetary policy. more to come on "worldwide exchange".
this is cnbc "worldwide exchange". i'm ross westgate. these are your headlines from around the world. ben bernanke is getting ready to speak at jackson hole. mitt romney has launched his full campaign for the white house in a speech the republican national convention. he's focused heavily on a pledge to create millions of new jobs. there's another warning sign for japan's struggling factories. industrial output falls in july because of weaker demand in china and europe. as a result low signs of improvement in the labor market. it reaches a record high in july. if you just tuned in stateside a warm welcome to the
last trading day of the week. what a day it promises to be. u.s. futures right now are indicate ad little bit hire. s&p 500 currently trading around three points, six points above fair value. nasdaq 11 points above fair value. dow is currently trading somewhat 35 points above fair value. european stocks are earned, had a down day yesterday between a quarter and a percent lower across the board. we're firmer. ftse 100 up around .2. camelback up two-thirds. ibex up 1.23%. so, what are investors to do as we wait for pronouncement from the fed, ecb and the next fed meeting and eurozone policymakers. here's what some experts have already told us today on cnbc. >> i like cable at the moment.
had that break out to the upside and worth watching because that's more the way you get the indication of some sort of bigger move on the pound. the pound for the moment a big buy. worth watching. i think we can make up for that 1.60. >> we're recommending a bit of caution. we think being short of real rates in the u.s. is probably the way to go. equities may be disappointing as well by the outcome. >> we prefer the dollar versus the euro definitely. probably little bit versus sterling right now. bernanke will come out and reiterate everything he's done. it continues to make sense if there's weakness we'll be there. we fully believe he'll be there. okay. and i think there's something going on in jackson hole today. that's what is it, fed chairman
ben bernanke is speaking this morning at 10:00 a.m. eastern. he's expected to acknowledge that the fed is actively considering another round of stimulus, although he may actually stop short saying anything is imminent ahead of the next fmoc meeting in two weeks. bond yields at the beginning of august they shouldn't and since then they've come back down. the ten year is yielding 1.64%. so what are investors to do with so much policy uncertainty ahead? joining us is chief investment officer. rick, very good morning to you. thanks for joining us. two interviews yesterday, steve liesman has done in wyoming. he spoke to plosser and said the cost benefit analysis of qe doesn't add up. lockhart told him it's a pretty close call. what are investors to do at this particular moment, trying to work out whether we get qe or
not. >> i think at the end of the day it will still be aggressive. today we'll hear what all the tools are that the fed still has at its disposal and there's a mir raid of them. i think they will talk about extending the language out in terms of keeping rates low for an extended period of time. what does that mean? rates certainly five years will stay low for a long time. we love buying yelled in today's market. debate about qe, he has to leave the options open. we'll get a tremendous amount of data over the next few weeks. he has to lay out by the way here's the costs and tools at his disposal. >> you would keep buying the short end of the curve? >> yeah. we still love spread product anywhere five years and in will continue to be attractive. the fed's mandate is obviously to price stability and full employment. you can't create full employment
for a long time. the fed can't move even if they say they don't extend the language today to 2015 or even not today but the next meeting, if they don't do that they have to be there given the tact you have to fix employment. the front end of the curve it's still attractive. >> we heard earlier from andrew wilkinson saying, concentrating on the fed's balance sheet and he talked about how they would use that. what's your own view? >> i do think that, you know, i i had the fed would rather not use their balance sheet. they've done a tremendous amount over the last few years. i think they rather not. i think the operation of twist you don't expand the balance sheet. talking your way to what is easier policy extending language or target for language. i think that's a direction that they prefer to go down for sure. is it enough? i'm not sure it is. i think ultimately you'll go down the road of qe. i think they will mention and i
think bernanke will mention and they recognize the cost of utilizing it are significant. >> how does the dollar call, rick, fall into this because it's interesting the dollar is weakening a little bit in this session at the moment here in europe and normally of course if you get expectations of mormon tear policy or using tools, that might weaken the dollar further. i you know think actually it will strengthen. >> yeah. i do think structurally the dollar will strengthen particularly against the euro, no doubt that the fed would consider using its balance sheet, no doubt a fed that's easing in terms of policy for a long time. that being said when you look at the structural challenges that are there in europe and be there for many years, you're going to have easing policy in the u.s., that being said you have to have easing policy, you need expansion of the balance sheet in europe and there are structural whether demographics or growth prospects in the u.s. or europe where it's better.
look at credit creation. credit creation drives growth in any economy. it's improving in the u.s.. lending is picking up. you're seeing parts of the economy improve. europe will be slow for a long time. structurally we think the dollar will be stronger than the euro as well as many other countries for a while. >> what do you do? you mentioned the euro. we were told last week the ecb will lay out a plan. it will be dependent on a lot of things happening. what do you do? we've seen yields fall a little bit. what do you do with that market? >> you know, i think that going back to the eurozone summit back to the end of june you've seen a clear change in the discussion. i think you have to be more
careful. we've talked about buying some of the peripheral, particularly italy where you're running at a primary surplus, where you have tool at your disposal, where there are programs that will be put in place. italy is just a problem in terms of too much debt that has to be rolled. we got more comfortable buying italy. we've got a bit more comfortable buying the short end and we think the ecb will be more aggressive. that being said, it's hard to get significantly bigger today because you think about the next 45 days, the amount of news flow and the potential for dissent and potential for negative headlines is real and so you can't -- while we like adding some exposure you can't get too filled up at this point. >> rick, good to see you this morning. thanks for joining us. we got spokesman for the german finance ministry saying a full rescue program for spain is
not on the agenda. but may need some kind of assistance for the toebs buy. the spokesman said merkel, merkel believes it's good that weidmann is warning politicians. smoothing things over. mitt romney is accepting the nomination as presidential candidate. he pledged to create jobs and boost the economy and in move to inject some hollywood glamour into the proceedings clint eastwood spoke before romney. in a long and strange kind of way. >> how do you handle it? what do you say to people, do you just -- you know i know people -- people are wondering
you don't, you don't. okay. i know some people in your own party are very disappointed we didn't close gitmo and i thought that, well i think closing get month, why close that? we've spent so much money on it. but i thought maybe it was an excuse. >> okay. so we had our own special guest, empty chair this morning been pretty vocal about a number of things. we've been asking you to e-mail in your own questions. interesting. you can ask anything you like of any particular guest. mr. chair, what is the current gold reserve total debt ratio to member states. mr. chair, i'm speechless and also we had a number of other guests, although looking very thin and tired and little fail at least empty chair speaks good old down earth common sense,
albeit quietly. and one wants know if she thinks there's a resolution to the spanish debt crisis in september. i'm having a quiet conversation with empty chair about that and i'll release the details towards the end shocht. still to come more details of last night's events in tampa when we preview the democratic national convention kicking off next week. also plenty more from "worldwide exchange". [ male announcer ] whether it's kevin's smartphone... mom's smartphone... dad's tablet... or lauren's smartphone... at&t has a plan built to help make families' lives easier. introducing at&t mobile share. one plan lets you share data on up to 10 devices with unlimited talk and text. add a tablet for only $10 per month. the more data you share, the more you save. at&t.
okay. just a reminder what the headlines are today. ben bernanke is taking the stage at jackson hole. investors are waiting for any signals that he might have on fresh action to spur the economy. mitt romney has launched his full campaign for the white house with his speech at the republican national convention. and unemployment in the eurozone stays at a record high in july as the crisis weighs on the labor market. so mitt romney made his case tore american voters last night at the republican national convention after which cnbc's john harwood filed this report. >> reporter: mitt romney entered the final night of the republican national convention with two main missions, one to let the american people get to know him a little bit better, connected in a way he hasn't so far, the other was to give them an argument for why he should
replace barack obama as the next president. he humanized himself about telling stories about his faith, upbringing and reached out the women about telling a story about his parents. >> my mom and dad were true partners, a life lesson that shaped me by every day example. when my mom ran for the senate my dad was for her every step of the way. i can still see her saying in her beautiful voice why should women have any less say than men about the great decisions facing our nation? >> reporter: he went beyond personal and talked about the economic jepd, trade, economic independence, reducing regulations. he used his background at bain capital and made the argument that president obama doesn't understand how the private economy works. >> we weren't always successful at bain but nobody really is in the real world in business. that's what the president
doesn't under. business and growing jobs is about taking risk, sometimes failing, sometimes succeeding, but always striving. >> reporter: mitt romney's speech was preceded by an odd bit of stage craft by clint eastwood, he came on stage and held an imagery conversation with an empty chair that was supposed to feature barack obama. romney's advisors can't be too pleased with the reaction to that event. they were pleased with ann romney's speech, paul ryan's speech and mitt romney's speech tonight. this was a chance to may have millions of americans to see im. now they've tornado watch polls and see if he got the bounce he needed to overcome the narrow lead that president obama has held most the year. >> that wraps up the republican national convention. on the road to the white house the next stop is a democratic national convention. dnc being held in charlotte, north carolina from september 3rd through 6th. barack obama, joe biden and rahm emanuel will all take the stage. then after that, it's the start
of the presidential debates, romney and obama squaring off on october 3rd in denver. vps are up next they go head-to-head in danville, kentucky on the 11th of october and followed by another presidential debate on the 16th in new york. and then a final turn on the floor for obama and romney on october the 22nd, in boca raton, florida. ahead of the general election on november 6th. still to come on today's program, how investors are going to react? will they be disappointed when they hear from ben bernanke? we'll be out to jackson hole right after this.
at merrill lynch, we understand the importance of your goals. today, our financial advisors lead from a new position of strength. together with bank of america, they have access to more resources than ever before. a steadfast commitment to help you achieve your financial goals in life. that's the power of the right advisor. that's merrill lynch.
wyoming in a few minutes. before that, unemployment in the eurozone has reached an all time high. highest level since records began for the euro area. 11.3% unemployment rate. june figure was revised up to that point as well. despite that number and despite we saw inflation come in stronger today as well, eurozone cpi 2.6%. the euro dollar is up at a session high, 1.25. the dollar as we go towards ben bernanke's speech is weaker across the board. anticipation of course has been growing all week. federal chairman, ben bernanke giving that speech today at 10:00 eastern. steve liesman has been there. he's been previewing what mr. bernanke may or may not say. >> fed chairman ben bernanke will open the possibility of additional quantitative easing in his most watched speech this morning. b bern during move of hhis tenus
chairman doesn't front run the committee. there's a payroll report and several reports on the services sector and manufacturing. plus there will be a pretty long and drawn out debate on the cost and benefits of additional quantitative easing. one person we spoke to last night about the benefits and the cost was philadelphia fed president charles plosser and said the math isn't there. >> it's a cost best analysis. the effectiveness of q search i don't think it meets the cost benefit test right now. >> part of the problem for policymakers is that the data has been pretty much in the middle. growth is about 2%. just about to keep the unemployment rate maybe stable, maybe rising a bit. doesn't create a definitive case. we talked to dennis lockhart and he said it was not an easy decision. >> it's close call, really. if we were to see deterioration
from this point and let's say a persistence of job growth numbers that were well below 100,000 a month, if we were to see that, or if we were to see signs of disinflation that could signal the on set of deflation then there wouldn't be much of a question about policy. >> while fed policy will be a huge subject of debate of equal importance is the discussions about euan bank and its policies as well. the ecb meets next week september 6th and it will be a big question what kind of plans they come up with to buy the debts of some of the troubled sovereign nations in the eurozone right now. more the ecb does it may change what the fed does which soot reason why bernanke will keep his options open. back to you. >> we're very lucky that neil irwin has allowed us to wake him up. neil, good morning to you. it may not be that good for you
but good for us. thanks for joining us. this is a sort of a monetary policy walk fest over in wyoming. what is bernanke going to say? will he lay out in depth the auctions without actually indicating whether he'll use any of them? >> i think so. i don't think you can expect too much out of chairman bernanke in a few hours. here's a point of context. if you remember two years ago, in august 2010 chairman bernanke gave a speech. we now remember it as the beginning of qe2. remember it as the first kind of signal that the fed of going to do qe2. kind of a progress after that point. if you remember from that time, at the point in august of 2010 a lot of us viewed that as a neutral speech, kind of a sign that, yeah, we might easily, might buy more bonds, but we're not so sure, it's kind of an
even case, here's the case for or against. what the chairman not do is come out in a speech and says here's what we'll do. what he does here's the pros, here's the cons and here's what we're thinking about. i think that's what we'll have. >> what's dominating. in mind how evenly balanced are the pros and the cons? >> well, the pros nor action. pros for a qe3, some kind of big program to try and ease policy and get the u.s. economy growing faster. you know, it's pretty simple. the u.s. economy has been adding jobs at too slow of a pace to bring down unemployment over time. the u.s. economy is growing too slowly. it's been muddling along, not an escape velocity as the chairman said at times. the u.s. economy is not growing fast enough to make substantial progress in getting back on
track. it's more of a kind of muddling along and neutral. >> and besides this discussion which is going on, i'm wondering, around the fringes or, you know, in the back rooms or the bars there, what's the conversation that people are having in private, if you know what i mean. what are they focused most? >> it's more to what people who come on your program and talk about these things and public say than you might think. it's this constant debate is the job of the federal reserve to try and get this u.s. economy back on track or is it a broader set of things that's not really -- is outside of the purview of the central bank. is what ails the u.s. economy is it something the fed can fix by doing a new qe3, doing an open bond purchase program something like that or it is something
that's deeper and requires something that really is not that bernanke can do anything about. >> has draghi been missed in >> i think so. we would have loved to hear from him on saturday. he was supposed to speak. but he's not joining you. he's back in frankfurt trying to figure out what ethic the ecb is going to do about its own challenges. >> neil, we appreciate that. thank you for joining us. neil irwin a reporter at the "the washington post". thank goodness he's been with us. without him i would have been left with an empty chair. right. that's about it for today's show. we'll leave with you a look at u.s. futures ahead as the action out of jackson hole, wyoming. we're implied for a higher start this morning, up 34 points. your honor stocks are up as well. "squawk box" gets under way in a few moments.
for me and temple ti chair, have a beautiful day. [ male announcer ] drive a car filled with as much advanced technology as the world around it. with the available lexus enform app suite, you can use opentable to make restaurant reservations. during the golden opportunity sales event, get great values on some of our newest models. this is the pit of perfection.
good morning. today's top story, ben bernanke's message from the mountains after weeks of market speculation about stimulus plans the fed chairman will speak in jackson hole today. to an empty chair. a drama in europe, rumors that the bundesbank president might resign sweeping the markets overseas. he's one of the most strident hold outs against the potential ecb bond-buying plan. and your money, your vote, mitt romney officially accepting his party's nomination for president with a little assist from clint eastwood. >> wish president obama had succeeded because i want america to succeed. but his promises gave way to